INFLATIONIt can be stated that Inflation is the rise in prices of products as a result of the increase in the quantity of money. This definition however would be inefficient since for two reasons; 1. If we simply term inflation to be a rise in prices of certain products then we will be mistaken because prices might be rising in one sector of the economy yet falling in another sector. 2. We have to take into account that the process may be high this month but generally fall the following month Mudida in his book Modern economics (2009:433) gives a better definition, he defines inflation as the persistent rise in general price levels. Hardwick on the other end gives specifics; he states that for inflation to occur price levels must be rising continuously and over a long period of time. Introduction to modern economics (1999:569) All never the less flutter around one idea, that inflation is a rise in prices, and this rise must be consistent.

TYPES OF INFLATION
These are generally classified under two broad categories
* Demand pull-inflation and
* Cost push-inflation
DEMAND-PULL INFLATIONThis type results when there’s excess aggregate demand in an economy that is close to full employment. Let us assume that the aggregate supply is fixed and that the economy has fully employed its resources and there is full employment. When money supply increases, the demand for more goods increases, considering our economy is now maximally utilizing its resources, and there is full employment. There is nothing that can be done to increase the production. What we experience therefore is an increase in demand un countered with an increase in supply. The economy therefore experiences an excess demand. The increase in demand therefore inevitably leads to an increase in price levels of goods and services. According to Jinghan, in his book, Principles of economics ( 2004:576) the effect thus experienced is in accordance with Keynesians theory on demand-pull...

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...Inflation and Unemployment
Definition
Inflation
• Refers to a continuous rise in general price level “In inflation everything gets more valuable except money”
Types of Inflation
(i) Moderate Inflation or Creeping Inflation: The general level of prices rise at a moderate rate over a long period of time • A single digit inflation is considered moderate and people continue to have faith in monetary system
Types of Inflation
(ii) Galloping Inflation: Inflation that proceeds at an exceptionally high rate (Average annual inflation 1050%) (iii) Hyper Inflation: Inflation more than three-digit rate per annum (very high or ‘out-of-control). (Average annual inflation of more than 50%) Currency become worthless and very less demand for money
E.g.: During Jan. 1922 to Nov. 1923, the prices in Germany shoot up by 100 million percent. Hyperinflation in Zimbabwe
Hyperinflation
Causes of Inflation (Theories of Inflation)
• Demand Pull Inflation – caused by demand factors
• Cost Push Inflation – caused by cost factors
Causes of Inflation
Demand Pull Inflation (Demand-side Theories of Inflation) Inflation is caused by an increase in any of the...

...Inflation is defined as a sustained increase in the general level of prices which results in a decline in the purchasing power of money. Inflation is measured through the Consumer Price Index (CPI) which measures proportional changes in prices in a representative “basket” of g’n’s, weighted according to their importance in a typical Australian households budget. The RBA aims to keep inflation at an annual rate of 2-3%, and in order to do this a number of policies are available for the Australian government. Keeping Inflation under control is a primary concern for the Australian Government as it affects so many different parts of the Economy, including Economic growth, standard of living and unemployment.
There are three types of inflation, depending on their causes. Firstly, demand pull inflation occurs when there is an excessive aggregate demand at or near full employment. If aggregate demand exceeds aggregate supply, prices of g’n’s rise as a rationing mechanism. This form of inflation is usually associated with periods of high economic activity. Secondly is cost-push inflation. If business costs such as the cost of wages or materials rise, businesses may aim to maintain profit levels by passing these costs onto consumers. This will result in higher prices and therefore inflation. The final type of inflation is imported...

...essay about the following topics.
1. Examine the causes of inflation
2. Outline the four best ways whereby the government can reduce bother cost and demand inflation
The causes of inflation & government policies that help to achieve the goal of low inflationInflation is a devastating condition when there is a rise in the general level of prices paid for goods and services over a period of time. It is calculated by Australian Bureau of statistic (ABS) by means of Consumer Price Index (CPI). The CPI measures the average change in the retail price of a basket of local and imported goods and services that represent a high proportion of expenditure by metropolitan households. Inflation can be a threat for a country’s economy as it will eating away all material living standard.
There are two main types of factors that can affect inflation rates. They are excessively strong demand-side factors and less favourable supply-side factors. The most common one is strong aggregate demand factors causing demand inflation. It’s simply too much spending chasing too few goods and services. In this case, aggregate demand is growing at an unsustainable rate and runs ahead of productive capacity. This will usually result in wide spread shortage of goods and services and increasing pressure on scarce resources. As a result, the general price level will rise in order for...

...Name:___________ Date Due:__August 01, 2011_______
Chapter 8: Unemployment and Inflation
1. What does the unemployment rate measure? ___________________________________________________
____________________________________________________________
______________________________
2. What does the labor force participation rate measure? ___________________________________________
____________________________________________________________
______________________________
3. If the total population (age 16 and over) is 40 million, 1 million are unemployed, and 24 million currently hold jobs, how big is the labor force? _____________________________ what is the unemployment rate? _________________________ the labor force participation rate? _______________________________
4. If the total population (age 16 and over) is 48 million; of this total, 4 million are unemployed and 36 million currently hold jobs. What is the rate of unemployment? __________________________ the labor force participation rate? __________________________
5. How would the BLS classify each of the following people?
a) an administrator who has been working as a teacher one day per week while looking for a full-time job _______________________________
b) a mathematician who returned to graduate school after failing to find a job during the last four months _______________________________
c. c) a former steel worker who would like to work but has given up...

...Inflation vs. Unemployment
Inflation and unemployment are two key elements when evaluating the economic well-being of a nation, and their relationship has been debated by economists for decades. Inflation refers to an increase in overall level of prices within an economy; it means you have to pay more money to get the same amount of goods or services as you acquired before and the money becomes devalued. For example 10 dollars seventy years ago had the same buying power that 134 dollars have today (Bureau of Labor Statistics). This is the result of the government printing more and more money and each individual dollar being worth less and less, comparatively. Unemployment refers to the amount of people that are available or eligible to work, but are unable to find employment. This is measured by the unemployment rate, which is the percentage of the labor force that is unemployed. As inflation rises, unemployment decreases in the short run, but is generally unaffected by inflation in the long run.
Unemployment is harmful to both individuals and society as a whole. obviously when an individual is unemployed, he or she is unable to earn money and thereby their standard of living decreases. In terms of the economy as a whole, unemployed workers are seen as wasted production capability. These are people that could be working and contributing to the GDP, but instead are having the opposite effect. Unemployed...

...﻿INFLATION vs UNEMPLOYMENT
Which is the Bigger Evil ?
Firstly, what is inflation and what is unemployment ? Unemployment occurs when a person who is actively searching for employment is unable to find work. Unemployment is often used as a measure of the health of the economy. The most frequently cited measure of unemployment is the unemployment rate.This is the number of unemployed persons divided by the number of people in the labor force, whileinflation is the rate of change in the general level of prices, expressed usually as an annualized percentage
Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum. As inflation rises, every dollar will buy a smaller percentage of a good. For example, if the inflation rate is 2%, then a $1 pack of gum will cost $1.02 in a year.
Central Banks and governments often face a choice between reducing inflation or reducing unemployment. Which imposes the greatest cost on society - inflation or unemployment?
Inflation imposes several costs on Society
Inflationary growth is unsustainable. High inflation is often a sign the economy is overheating (demand growing faster than supply). This kind of boom is often followed by a bust (recession) This occurred in UK in Lawson boom of 1980s -...

...topic of our presentation is the “Inflation and growth of production: theory and practice”.
Thus our presentation contains two main parts.
Firstly we will look out the theory. Here we will single out the keinsian version of this question.
Then we will review some statistic indexes which concern our topic.
1. Inflation - Monetary sense of "enlargement of prices" (originally by an increase in the amount of money in circulation) first recorded 1838 in Amer.Eng.
Kinds
On the Basis of Rate of inflationInflation on this basis is grouped as (i) Creeping inflation (ii) Walking inflation (iii) Running inflation and (iv) Hyper inflation.
(i) Creeping inflation. is a situation in which the rise in general price level is at a very slow rate over a period of time. Under creeping inflation, the price level rises up to a rate of 2 percent per annum. A mild inflation is generally considered a necessary condition of economic growth.
(ii) Walking inflation. Walking inflation is a marked increase in the rate of inflation as compared to creeping inflation. The price rise is around 5 percent annually.
(iii) Running inflation. Under running inflation, the price increase is about 8 to 10 percent per annum.
(iv) Galloping or Hyper...

...Definition
In mainstream economics, inflation is a rise in the general level of prices, as measured against some baseline of purchasing power.
The prevailing view in mainstream economics is that inflation is caused by the interaction of the supply of money with output and interest rates. In general, mainstream economists divide into two camps: those who believe that monetary effects dominate all others in setting the rate of inflation, or broadly speaking, monetarists, and those who believe that the interaction of money, interest and output dominate over other effects, or broadly speaking Keynesians.
Related terms include: deflation, a general falling level of prices, disinflation, the reduction of the rate of inflation, hyper-inflation, an out of control inflationary spiral, and reflation, which is an attempt to raise prices to counter act deflationary pressures.
Measures of inflation
Measuring inflation is a question of econometrics that is, finding objective ways of comparing nominal prices to real activity. In many places in economics, "real" variables need to be compared, in order to calculate GDP, effective interest rate and improvements in productivity. Each inflationary measure takes a "basket" of good and services, then the prices of the items in the basket are compared to a previous time, then adjustments are made for the changes in the goods in the basket...